Interconnect billing is how operators charge each other for traffic that crosses their networks. When a call, SMS or data session starts on one network and ends on another, the terminating operator is owed a fee under the interconnect agreement. Interconnect billing rates that traffic per partner, reconciles both sides’ figures and settles the net balance.
Retail billing gets most of the attention because subscribers see the invoice. Interconnect is the bill nobody outside finance sees, and it is where an operator either collects what partners owe or quietly writes it off. A mid-sized operator can have dozens of interconnect partners, each with its own tariff sheet, dispute history and payment terms.
What is interconnect billing?
Interconnect billing is the calculation of what operators owe each other for traffic exchanged between their networks. It covers voice termination, SMS (including A2P messages from aggregators), and, for operators that exchange data or roaming traffic, data sessions too.
Two things make it different from billing a subscriber. The customer is another operator, bound by a bilateral agreement rather than a price plan. And the work happens on traffic volumes, not on individual usage: millions of call records become a few hundred lines per partner, route and period.
| Retail billing | Interconnect billing | |
|---|---|---|
| Who pays | Your subscriber | Another operator |
| Price comes from | Your price plans | The interconnect agreement and partner tariffs |
| Unit of work | One customer’s usage | Traffic aggregated by partner, route and period |
| Output | Customer invoice | Reconciled statement and net settlement |
| Disputes | Customer complaints | Discrepancies between two operators’ records |
Retail and interconnect billing read the same call records but answer to different customers.
How interconnect settlement works
Interconnect settlement is a monthly (sometimes weekly) cycle in which each operator rates the traffic it exchanged with a partner, the two compare results, and the agreed balance is netted and paid. In practice the cycle has seven steps:
- Collect. Mediation picks up call and event records from the switches, SMS centres and gateways, and normalises them into one format.
- Assign. Each record is linked to a partner, a direction (incoming or outgoing) and a route or destination.
- Rate. The record is priced with the partner tariff valid on the date of the traffic, not on the date of the billing run.
- Aggregate. Rated records are summed by partner, route, direction and period, which is the level at which operators compare figures.
- Exchange statements. Each side sends its statement, or an invoice for what it terminated.
- Reconcile. Your figures are compared with the partner’s. Differences inside the tolerance written into the agreement are accepted; larger ones become disputes.
- Net and settle. What you owe and what you are owed are offset, and only the balance is invoiced and paid.
Most of the effort sits in steps 2, 3 and 6. A tariff change loaded a week late, or a route assigned to the wrong partner, produces a discrepancy that someone has to find, fix and re-rate. That is why the ability to relink and re-rate a closed period, as many times as needed, matters more in interconnect than almost anywhere else in billing.
The interconnect billing data model
An interconnect billing data model needs about ten entities. Partners and agreements describe the commercial relationship; tariffs, traffic and aggregates carry the numbers; statements, discrepancies and settlements close the cycle.
| Entity | What it holds | Why it matters |
|---|---|---|
| Partner | Operator, carrier or aggregator, with its identifiers | Every record must end up with one partner |
| Agreement | Services covered, billing period, tolerance, payment terms, currency | Sets the rules of the cycle |
| Partner tariff | Rate per destination or route, with start and end dates | Lets an old period be re-rated at the rate valid then |
| Route and destination | Number ranges, trunks or gateways mapped to partners | Drives the assignment step |
| Traffic record | One call, SMS or session from mediation | The raw evidence in a dispute |
| Aggregate | Volume and amount by partner, route, direction and period | The level at which both sides compare |
| Statement | The partner’s figures, or your invoice to the partner | Input to reconciliation |
| Discrepancy | Difference between the two sides, with status and owner | Tracks the dispute until it closes |
| Settlement | Netted balance for the period | What is actually invoiced and paid |
| Partner balance | Open amounts and payments received | Shows who owes whom today |
Ten entities cover a full interconnect cycle, from the raw record to the netted payment.
The tariff entity deserves the most care. If it keeps only the current rate, every correction to a past month becomes a manual spreadsheet job.
Regulated rates, roaming and bill-and-keep
Not every interconnect price is negotiated. In the European Union, voice termination rates are capped by regulation: Commission Delegated Regulation (EU) 2021/654 set a single EU-wide maximum (“Eurorate”) that brought mobile termination to 0.2 euro cents per minute in 2024, and fixed termination to 0.07 euro cents (European Commission, 2021). An interconnect system has to hold those regulated rates alongside negotiated ones and switch on the right date.
Roaming is settled between operators too, but through its own industry formats. For years that meant GSMA TAP files exchanged through data clearing houses; GSMA’s Billing and Charging Evolution (BCE) standard moves wholesale roaming, including 5G, to a usage-summary model (GSMA, BCE). Many operators run roaming clearing in a separate system and feed the results into the same settlement and partner balance.
Some traffic carries no per-minute charge at all. Under bill-and-keep, each network recovers its costs from its own customers and the partners do not invoice each other for termination. The traffic still has to be measured and reconciled, because volumes drive capacity planning and the agreement can change.
Interconnect billing for MVNOs and MVNEs
Whether an MVNO (mobile virtual network operator) needs interconnect billing depends on its operating model. A Light MVNO that resells the host operator’s service usually leaves interconnect to the host: the host terminates the traffic, collects the fees and charges the MVNO a wholesale rate. A Full MVNO with its own core network, numbering and SMS routing settles with other operators itself, and then interconnect billing is part of its BSS from day one. The MVNO operating models page sets out where each model draws that line.
An MVNE (mobile virtual network enabler) adds one more layer. It settles with the host and with interconnect partners on behalf of all its tenants, then has to split each partner’s traffic and cost back to the right MVNO. That means the tenant becomes a dimension of every aggregate, and the settlement with a partner has to reconcile with the sum of the tenant shares.
A2P SMS is where MVNOs and brands most often meet interconnect for the first time. A bank or retailer sending verification codes through an aggregator is paying termination fees, and an operator that terminates those messages is collecting them.
How to choose an interconnect billing system
Choose an interconnect billing system on how it handles corrections and volume, not on how it renders an invoice. These are the questions worth asking on a demo:
- Dated tariffs and re-rating. Can you load a tariff with a past start date and re-rate a closed period without touching the periods around it?
- Relinking. If a route was assigned to the wrong partner, can you relink the traffic and recalculate in bulk?
- Volume. Does it process traffic in multi-threaded batches on its own database, so a month of records does not slow down retail billing?
- Discrepancy tools. Does it compare your aggregates with the partner’s statement line by line and track each dispute to closure?
- Netting and balances. Can it issue invoices and counter-invoices, accept payments and keep a running balance per partner, in the agreement’s currency?
- Margin per destination. Can it show what each route earns after termination costs, so commercial teams can reprice?
- Integration. Does it take records from your mediation and hand results to your ERP and reporting through a standard API?
A system that answers “yes, but through a support ticket” to the first two questions will cost more in finance hours than it saves in licence fees.
Where Avante fits
Avante IBS is the interconnect billing system of the Avante BSS. It runs as a separate system on its own database instance and processes traffic in multi-threaded batches, so interconnect runs do not compete with retail billing. It covers the cycle described above:
- tariffing rules that can be added or changed at any time, with the change date fixed for re-rating;
- repeated linking and relinking of loaded traffic, iterative re-rating and reconciliation, and tools to find and remove discrepancies;
- invoices and counter-invoices for reconciliation, payments of different types and a balance per partner;
- margin and profitability analysis by destination, with reporting that can be exported to external systems.
Traffic arrives from Avante Mediation, and the results can stay in Avante IBS or go to an external system through its standard API. For operators that also need retail charging, it sits next to convergent billing in the same stack, and MVNOs and MVNEs get it as part of the MVNO platform.
FAQ
What is interconnect settlement?
Interconnect settlement is the end of the interconnect billing cycle. Each operator rates the traffic exchanged with a partner, the two compare statements, resolve discrepancies above the agreed tolerance, and offset what each owes the other. Only the net balance is invoiced and paid, usually monthly.
What is the difference between interconnect billing and roaming billing?
Interconnect billing covers traffic between two networks inside a market or across borders, priced under bilateral agreements or regulated rates. Roaming billing covers your subscribers using a partner’s network abroad, settled through GSMA formats such as TAP or BCE. Both end in an inter-operator settlement, often in one partner balance.
Do MVNOs need interconnect billing?
A Full MVNO with its own core network and numbering usually does, because it pays and collects interconnect fees itself. A Light MVNO normally leaves interconnect to the host operator and pays a wholesale rate instead. An MVNE settles for all its tenants and then splits the costs per MVNO.
What is reconciliation in interconnect billing?
Reconciliation is the comparison of your rated traffic with a partner’s statement for the same period, partner and route. Differences within the tolerance written into the agreement are accepted. Larger ones are investigated record by record, corrected by relinking or re-rating, and either closed or raised as a formal dispute.
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